Massachusetts overturns co-pay card ban

After three years of wrangling, drug companies can again offer co-pay coupons and cards or buy doctors lunch off-site -- with some limitations.

Governor Deval Patrick put the changes in place when he signed the 2013 budget Sunday. The co-pay card ban was undone by narrowing a broad 1988 law that barred kickbacks.

“The drug coupons were always seen as falling under this prohibition," Wells Wilkinson, an attorney with the interest group Community Catalyst, explained. "The legislature left that law intact, but then carved out an exception for co-pay coupons."

Medicaid and Medicare patients will still be barred from using the discount cards, because the Federal programs forbid them.

The Pharmaceutical Care Management Association has been among the groups against co-pay cards, and a 2011 report from the group indicated that overturning the Massachusetts ban would increase the state's prescription costs by $750 million over ten years. Spokesman Charles Cote told MM&M those numbers still hold, and said it was too early to determine what the organization's next moves regarding Massachusetts would be, if any.

“They have really kind of set the state up for the increased costs related to the marketing of extensive brand name drugs through these co-pay coupons” Wilkinson said.

“The problem with that line of reasoning is that you're acting as if there's no end benefit for those patients,” Thomas Sullivan, president of the medical education company, Rockpointe, told MM&M. Sullivan said the cards have a clear benefit: patients take their medications and live healthier lives. "All they're focused on is the potential cost,” he added.

Yet the law change doesn't mean the battle over retail discounts is over. Wilkinson is an attorney for a multi-party lawsuit against eight drug companies that which was filed on behalf of groups including the AFSCME District Council 37 Health & Security Plan Trust and the Sergeants Benevolent Association. This lawsuit doesn't rely on the Massachusetts kickback law, but rather alleges that that the coupons are a form of fraud because they hide the point-of-purchase cost from insurers. This in turn, undermines healthcare plans that are calibrated to contain costs, which is another point of contention.

State lobbying data shows surprisingly little largesse from pharmas -- a Massachusetts registry indicates that Eli Lilly spent $267,318 on lobbyist salaries last year, and the Massachusetts Biotech Council spent $260,000 to court political support. But these efforts are part of a larger strategy including more than $250 million in industry lobbying at the federal level in 2009, and an amount just shy of that benchmark in 2010 and 2011.

But finances are clearly playing a role, as seen in another part of the new Massachusetts budget – the ability to offer physicians fries, or something more, outside of the office.

Massachusetts put the kibosh on meals outside of office settings in 2008, and the lower house of the commonwealth's legislature has tried to overturn the legislation ever since. However, the 2012 version still needs some work – the legislation says “modest meals and refreshments in connection with non-CME educational presentations for the purpose of educating and informing health care practitioners,” are allowed, but the definition of “modest” is up to the Massachusetts health department.

The new law isn't a license to go all-out and treat physicians to a meal. Massachusetts Life Sciences Center VP Angus McQuilken told MM&M the change is “a very modest change that affects only one particular aspect of what can be provided to professionals during a training session.” The state legislature created the semi-public agency in 2006. McQuilken noted that training can often span several hours and “it seems appropriate that modest meals could be provided to people in these trainings.” McQuilken noted that the state still restricts gifts, and said this change was “to address some legitimate considerations that have been raised by the industry and healthcare providers.”

Clark, the director of government affairs for the Massachusetts Restaurant Association, said it will take some time for the revision to have a financial impact on local industry, and it will take 60 to 90 days for the health department to come to a decision about what it means to provide a modest repast. Sifting out how much money was lost since the ban went into effect four years ago is hard to gauge – Clark told MM&M in April that the recession colored industry numbers.

Sullivan agreed, saying “I think the difference this time is clearly the economy hasn't come back so they're focused a lot more on jobs now,” and added that elections are part of the shift: the House has been trying to overturn the ban on food for years, and now, several former House members sit in the state Senate.

“I think it's pretty important to know that states like Massachusetts, which is a pretty progressive state, are pulling back on some of what they had originally thought . . . they realized, I think, they went too far in banning meals for healthcare providers and they made this change” he said.